While economists (as usual) refuse to agree on the specifics, there is a general consensus that the recovery may (finally) be underway. Last week the Labor Department announced that in January over 240,000 new jobs were created and that the unemployment rate was at its lowest level in three years. In addition, tax revenues are increasing as is consumer spending, and exports have grown across many industries.
For small business this is great news. Not just because it means that other companies are hiring, but it means that other companies are spending. One of the most corrosive effects of the weak economy has been the impact on how, when, and where businesses have spent; small business in particular took a hit because of reduced spending. When customers choose to defer spending on services and goods which might not be 100% necessary to their business, many other businesses are impacted. And when companies can be confident enough to start spending again, the trickle effect can have a positive impact on many other companies, too.
Small businesses can and should plan for an improving economy, just as they have for a downturn. In a bad economy we plan and execute tactics to cut back on discretionary spending, reduce labor costs, postpone expansion, defer marketing efforts, reduce inventories, and minimize all extras and perks. In an improving economy, small business in particular can look for ways to leverage the upswing and to strategically benefit from some of the opportunities created when bad times start to get better. Here then are 5 thoughts on ways small business and startups can get a jump on the growth!
1. Look for new talent. In the last few years, layoffs have taken a toll – hundreds of thousands of workers are still on the search for that new job and the pool of available talent is probably the richest it has been in decades. Consider filling any positions you might have left vacant during the downturn, or even creating new ones to take advantage of an uptick. Many positions require training and many new employees can take months to get fully up to speed, so start planning ahead for the growth that may be in store.
2. Invest in equipment. Capital expenditures were among the most commonly deferred costs for many businesses over the past few years, and manufacturers felt the sting. But now factories are gearing up again, with job growth in the manufacturing sector among the strongest last month. Inventories are also on the increase and together these act as a leading indicator and a strong sign of recovery. While credit remains tight, interest rates are at a historical low and government incentives are available making investment in equipment, furniture, and fixtures an attractive proposition.
3. Refinance. As I mentioned above, credit remains tight for most businesses and banks are not exactly making it easier for us to increase lines of credit or take out new loans. But with interest rates at historical lows, many businesses could benefit by refinancing existing loans at rates which we may never see again. Call your bank to discuss any products or programs that might be a good match for your company and encourage your government representatives to support proposals to ease the credit crunch for small business.
4. Focus on IT. An economic upturn is a great opportunity to reassess your IT infrastructure. An IT audit to determine whether the people, technology, and internal processes you have in place are adequate and appropriate to support growth and fuel increased productivity. Do you have the right people in place to manage IT and technology processes? Is your hardware and software up to date and suitable to service your strategic goals? Is your IT robust enough to scale along with the growth you can expect in a stronger economy? In particular focus on smaller, short-term projects that can improve productivity and performance as well as increase overall quality.
5. Find efficiencies. Now is a great time to identify areas in your business where you can improve processes and find efficiencies both in productivity and cost. Your overall efficiency and ability to deliver your products or services to customers should be at their peak in time for increased business demand. New customers will have high expectations and existing customers will demand even more from you as their orders increase. Consider everything from your org chart to your training programs with the goal of increasing your yields, improving your outputs, building a more productive team, and improving your overall quality.